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China Slams EU Restrictions on Solar Inverter Funding

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-- China criticized the European Commission for restricting European Union funds for projects using Chinese inverters.

A spokesperson for the Ministry of Commerce argued that EU's classification of China as a "high-risk country" has no basis and that the move serves only to stigmatize and discriminate China and its products.

The South China Morning Post reported in April that EC President Ursula von der Leyen approved a proposal to block projects involving Chinese inverters from accessing EU funds.

Siobhan McGarry, a spokeswoman for EC, confirmed the move to SCMP, saying they have taken "concrete action" to implement these measures, including the development of guidance for the restriction, according to a Tuesday SCMP report.

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International

USD/CAD Likely To Remain "Trapped" In a Range-bound Environment In Coming Months, RBC Says

USD/CAD is likely to remain "trapped" in a range-bound environment in the coming months, with the pair seen trading between 1.3500 and 1.3900, RBC Capital Markets said in its latest FX View note.RBC added its end-of-second-quarter forecast for USD/CAD stands at 1.3700.The bank said Friday's Canadian and U.S. employment reports point to both the Bank of Canada and the Federal Reserve holding interest rates for now.Although, RBC noted, the Canadian employment series tends to be volatile, it said the latest print "pours some cold water on the possibility of a BoC rate hike in the short-term."Meanwhile, RBC said the "stabilizing" U.S. labour market further diminishes the risk of a near-term dovish Federal Reserve pivot, particularly as attention shifts to potential secondary-round inflation effects.RBC noted the outlook is also unfolding against the backdrop of the ongoing Iran conflict, "for which the path is uncertain.""As long as the USD is not experiencing a sustainable broad-based rally, this morning's Canadian data reinforce CAD's underperformance vs its commodity/higher yielding peers in the past month," the bank said.On technicals, RBC said last week's close below 1.3598 "reasserted the downtrend," suggesting that rallies are viewed as a selling opportunity. The bank noted USD/CAD was hovering around trendline resistance at 1.3674, with 1.3728 seen as the next resistance level. "If USD/CAD closes above the latter, then the risk is additional gains towards 1.3799 and 1.3856," RBC added.Support levels are seen at 1.3526 and 1.3482, according to the bank.

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International

Job Reports Not Enough To Take USD-CAD Out Of Its Range Bound Environment, RBC says

A softer Canadian jobs report today saw the unemployment rate up to 6.9% and resulted in a rates rally and curve steepening, RBC Capital Markets said in its latest CAD Weekly Soundbites note. But, the bank added, when that report is combined with the US labor report, that beat forecasts, it wasn't enough to take USD/CAD out of its range-bound environment.Canadian data also reinforced the Canadian dollar's underperformance versus its G10 commodity and higher-yielding peers over the past month, RBC said.On the Canadian economy, RBC noted the April jobs report showed a 0.2 percentage-point increase in the unemployment rate to 6.9%, with weakness evident in goods sectors, trade and transport/warehousing, though private-paid employment and total hours worked were little changed in the month.Looking ahead, RBC said next week will not feature key Canadian data releases, although there will be a number of second-tier reports including housing market data, wholesale trade on Thursday and manufacturing sales on Friday. "The softening labour market YTD has not translated to the product market, where Q1 GDP is tracking above-potential including the March nowcast," it added.The bank added that investors will also watch inflation data in Norway, New Zealand inflation expectations, U.S. producer prices, second-quarter GDP revisions in the euro area, U.K. first-quarter GDP, U.S. retail sales, and Japanese producer prices. RBC also noted that the Bank of Japan and Riksbank will release minutes from their latest meetings, while Norges Bank's Financial Stability Report is due Tuesday.On rates, RBC said the Bank of Canada's expected hold last week was delivered, although "the balance of changes tilted hawkish." The bank noted GDP growth is tracking in the 1.5%-2% range in the first quarter, which would result in a lessening of excess slack in the economy if realized in the full expenditure breakdown. RBC added improved labour market outcomes are expected as part of slack reduction over the year. "We maintain our long-held view: base case is the BoC on hold in 2026, with hikes in 2027, but the chance of H2 hikes far exceeds the chance of a cut."Meanwhile, RBC noted Government of Canada bonds outperformed their U.S. Treasury counterparts following the weaker jobs report, with the Canada/U.S. 10-year spread tightening 5 basis points to at -89 basis points from last Friday.On technicals, RBC said after yields failed to close above the key double top at 3.62%, the move back below a trendline dating to late February, now at 3.54%, "eases some of the topside risks.""This opens 3.43% and 3.39% next on the downside," RBC added.

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International

USD's Weekly Coppock Curve "Still Nominally In An Uptrend" Vs CAD, "But It Is Peaking", says Rosenberg Research

Walter Murphy over at Rosenberg Research noted in a last comment in early April the U.S. dollar's weekly Coppock Curve was in a confirmed uptrend against the Canadian dollar and was on pace to remain constructive into the latter part of May. Five weeks on, the indicator is still nominally in an uptrend, but it is peaking, he said. More importantly, the greenback is currently a good deal below its early-April levels against the Canadian currency, "despite those seemingly favorable momentum conditions", he added.According to Murphy, April's promise was "overwhelmed" by the combination of the 2025-2026 resistance trendline and the lower reaches of C$1.402-C$1.417 chart resistance area. "Those two elements have clearly proven their mettle (again)," Murphy said.Murphy noted the greenback is currently in the middle of the C$1.375-C$1.340 support range, while the resistance line is now at C$1.385 and declining by C$0.001 per week. "At that rate, it will not challenge the upper portion of the support band until early July," Murphy said.The peaking Coppock indicator will likely enter a confirmed downtrend by the end of May, according to Murphy. However, he said, the resulting bearish bias may only continue for a relatively few weeks, "perhaps into late June or early July."Under those conditions, Murphy said there may not be enough time for the U.S. dollar to do much more than test the lower boundaries of the C$1.375-C$1.340 support area.He added the year-to-date lows in the C$1.353-C$1.348 range "would be expected to provide some intervening support."

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